The troubled toy company, Toys R Us, is planning to either sell or close all of its more than 800 stores that are located in the United States of America.
The company is studying a plan that could ultimately save approximately 200 stores from going dark if it is not able to look for a buyer. This would be in connection with saving the Canadian business.
As a part of its restructuring efforts to revive the business, Toys R Us had already started liquidating around 180 of its stores, under both the Babies R Us and the Toys R Us banners. Last September, the toy retailer filed for bankruptcy protection. It weighed down by debt that amounted to almost $5 billion.
Most recently, the company has had a difficult time to pay on loans, and lenders had been urging the management to proceed with a complete liquidation of the U.S. business.
The unexpected shuttering of the massive store fleet of Toys R Us will leave a chunk of unoccupied real estate on the market. Landlords will be struggling to look for tenants for those locations that are not directly owned by the toy retailer.
Majority of the stores of Toys R Us today are leased back to a separate entity that was created by the company that is known as Toys R Us Property Co. or Propco. Real estate investment trusts such as Brixmor, DDR, and Kimco own a handful of the stores, while the remainder is directly owned by Toys R Us.
According to real estate analysts, the possible scenario for the majority of these spaces will include remodelling for multiple occupants. Most of the locations of Toys R Us and Babies R Us are over 40,000 square feet in size, and some are over 65,000. Tenants including Best Buy and Dick’s Sporting Goods, which also tend to occupy larger boxes, are not expanding as quickly anymore, leaving lesser logical replacements for these stores.